Invitation to treat

Generally, advertisements are not offers but invitations to treat, so the person advertising is not compelled to sell. In Partridge v Crittenden [1968] 1 WLR 1204, a defendant who was charged with "offering for sale protected birds"—bramblefinch cocks and hens that he had advertised for sale in a newspaper—was not offering to sell them. Lord Parker CJ said it did not make business sense for advertisements to be offers, as the person making the advertisement may find himself in a situation where he would be contractually obliged to sell more goods than he actually owned.

In certain circumstances called unilateral contracts, an advertisement can be an offer; as in Carlill v Carbolic Smoke Ball Company [1893] 1 QB 256, where it was held that the defendants, who advertised that they would pay £100 to anyone who sniffed a smoke ball in the prescribed manner and yet caught influenza, were contractually obliged to pay £100 to whoever accepted it by performing the required acts.

A display of goods for sale in a shop window or within a shop is an invitation to treat, as in the Boots case,[2] a leading case concerning supermarkets. The shop owner is thus not obliged to sell the goods, even if signage such as "special offer" accompanies the display. Also, in Fisher v Bell [1961] 1 QB 394, the display of a flick knife for sale in a shop did not contravene legislation which prohibited "offering for sale an offensive weapon". If a shop mistakenly displays an item for sale at a very low price it is not obliged to sell it for that amount.[3]

For an offer to be capable of becoming binding on acceptance, the offer must be definite, clear, and objectively intended to be capable of acceptance.

The tender process is a debated issue. In the case of Spencer v Harding,[4] the defendants offered to sell stock by tender, but the court held that there was no promise to sell to the highest bidder, merely an invitation for offers which they could then accept or reject at will. In exceptional circumstances, an invitation for tenders may be an offer, as in Harvela Investments v Royal Trust of Canada [1986],[5] where the court held that because defendants had made clear an intention to accept the highest tender, then the invitation to tender was an offer accepted by the person making the highest tender. The Harvela case also made it clear that "referential bids" (e.g. “$2,100,000 or $101,000 in excess of any other offer which you may receive, whichever is the higher”, as in the Harvela case) are void as being "contrary to public policy and not cricket".

In England, auctions are governed by the Sale of Goods Act 1979 (as amended). Section 57(2) provides: "A sale by auction is complete when the auctioneer announces its completion by the fall of the hammer, or in other customary manner. Until the announcement is made any bidder may retract his bid." S. 57(3) provides further: "An auction sale may be subject to a reserve price". However, if the auction is held without reserve then the auctioneer is obliged to sell to the highest bidder.[6][7] It is implicit from Payne v Cave (1789),[8] an early case concerning auctions, that each bid is deemed to expire when others make higher bids; but some auctioneers (such as eBay) have lawfully amended this presumption so that, should a higher bidder withdraw his bid, they may accept a lower one.

• Offer and acceptance

• Andrew Burrows, Casebook on Contract (Hart Publishing, 2007) Ed.